Rooms for Improvement

Guest Article | News | Newsletter | Pub Accommodation | Posted 2023.08.31

Rooms for improvement by Glynn Davis

Crossing Chislehurst Common through the heat haze of early summer (remember late May?), the vision of The Crown came into view like an oasis in the distance. Okay, I’m exaggerating a tad, but it was a very welcome sight, even though we’d only travelled 30 minutes or so from London on South Western Trains.

The pub had recently reopened after a major three-month overhaul at a cost of £1.4m by owners Shepherd Neame, which has brought this impressive property back to its prime. This included upgrading its seven guest rooms, among which are a premium couple at the front with balconies, providing expansive views across the common. This work represents an ongoing investment by the family-owned business in pubs-with-rooms, which includes some particularly beautiful properties on the Kent coast.

Interest in pubs-with-rooms seems to have accelerated post-pandemic as pub companies have increasingly recognised that adding accommodation to their premises can be an important driver of growth. In reality, during these tough times, for many businesses, it is the critical element that makes them viable. Having a major revenue/profit contribution from rooms can now be the determinant between life and death for many boozers.

I’d be surprised if there are any pubs that derive a meaningful contribution from rooms listed among the 223 pubs businesses that entered insolvency in the second quarter of 2023, according to data from Price Bailey, which was the highest quarterly figure in over a decade. It beat the previous record, set in the first quarter.

Adding rooms onto pubs is hardly a new strategy, with Young’s and Fuller’s among the pubcos buying into this approach some years ago, and it is paying off. For one thing, the ability for accommodation to drive food and beverage is a no-brainer. Young’s recently reported total accommodation sales up 73% in its annual results for the year to April 3, during which time it added 59 rooms, and since then it has bulked up by 26 more. To highlight its intent, it has rebranded its accommodation arm to Young’s Rooms.

It is a similar story at Liberation Group, which has accelerated its pubs-with-rooms activity, with more than 400 bedrooms now in its expanding portfolio compared with only 100 pre-pandemic, and it has identified opportunities to add a further 100 rooms within its existing estate of properties.

Jonathan Lawson, chief executive of Liberation Group, says: “We have been particularly encouraged by the strong demand for our accommodation. This is a reflection of our broad appeal for both leisure and business users…we view it as a significant opportunity for growth.”

This has not gone unnoticed by the Heartwood Collection, which was recently rebranded from Brasserie Bar Co, partly driven by a strategy to move into the pubs-with-rooms market. The plan is to expand the estate to 60 pubs, which would include 500 bedrooms, by 2027. It is currently under offer on six sites that involve 150 rooms, which would add to its recent purchase of the White Hart in Lewes, which has 26 bedrooms. This is being funded by an additional £100m committed by its investor owners.

This is all well and good, but what about those pub operators that don’t have the luxury of £100m sitting in their bank accounts, or smaller independents that don’t have the space to add rooms to their existing pubs? Maybe a nearby field is the answer. For country pubs that offered space for campers, the average income amounted to £14,000 for the pitches, and a similar sum was generated from the food and drink consumed in the venue, according to research from Pitchup.com.

The Thames Head Inn near Cirencester is benefiting from just such a move as it last year brought in a healthy £40,000 from its 11 pitches, and around 95% of campers spent money in the pub. Equally impressive is the revenue being generated at food-led pub The Red Lion in Brinkley, Cambridgeshire, where more than 50% of its camping guests spent around £100 in the pub’s bar and restaurant.

Although I personally would take my room-with-a-view at The Crown in Chislehurst over a tent in a field in Cambridgeshire, there is clearly more than one way for pub owners to leverage value from the now-established “staycation” phenomenon and open up some much-needed additional revenue streams for their businesses.

Glynn Davis is a leading commentator on retail trends.

This piece first appeared in Propel